Lower oil prices are fueling the spread of Chinese imports

• China’s crude imports rose to a 1-year high of 11.56 million bpd in August, rebounding from a two-year low in July.
• The increase in imports coincided with a decline in international oil prices, suggesting a potential link between price and purchasing behavior.
• While the rebound could be partially attributed to seasonal demand, China’s tendency to buy commodities at lower prices raises questions about the underlying strength of demand.

China imported the most monthly crude for a year in August as purchases rose as international oil prices fell when the commodity was contracted.

China’s crude imports rose to 11.56 million barrels per day (bpd) in August – the highest level since August 2023 and a major rebound from July’s low of 9.97 million bpd, data showed Chinese officials reported by Reuters columnist Clyde Russell.

China’s July crude oil imports were the weakest in two years. Crude oil arrivals rebounded in August, but were still 7% lower than in August 2023.

In addition, China’s crude oil imports fell by 3.1% in January-August 2024 compared to the same period in 2023.

Data on China’s crude oil imports for August cannot provide a definitive answer to the question many analysts have pondered this year — whether Chinese imports reflect an increase in demand or Beijing’s inclination to contract more volumes when prices of oil are lower.

August imports were likely contracted in the May and June windows when international crude oil prices were falling, Reuters’ Russell notes.

Brent prices fell in May and June from a high of more than $90 a barrel in early to mid-April – the highest this year.

The rebound in China’s imports in August could be attributed in part to seasonal demand patterns, as importers tend to increase purchases during the third quarter to stockpile fuel for peak winter demand.

But some of the recovery could be attributed to lower oil prices.

China’s propensity to source goods at lower prices could explain why Most merchandise imports saw higher imports despite economic growth below expectations.

With China’s apparent oil demand weaker than expected, lower international prices may have played a bigger role in Chinese purchases for August.

By Tsvetana Paraskova for Oilprice.com

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